The global fintech investment market has seen an “incredibly strong” second quarter of this year, according to new research.
KPMG’s Pulse of Fintech report showed that global investments in the first half of 2021 reached $98 billion (£70 billion) across 2,456 deals – an increase on the £87bn invested over the same period of 2020.
Last year the world saw a total of $121.5bn (£87.7 billion) invested in financial technologies, including venture capital and private equity investment, as well as mergers and acquisitions.
The reason for the boost in investment, the report said, was a wealth of business cash reserves, a boost in fintech firm adversity and “robust” fintech activity in almost all regions of the world.
Commenting on the research, Ian Pollari, Global Fintech Co-Leader and Partner at KPMG said: “Global investment in fintech has seen a quick V-shaped recovery from 2020 levels.
“Growing deal sizes, valuations and successful exits for proven players and proven thematics have driven this result. Corporates are also increasingly looking to seize new market opportunities or urgently address gaps by embracing partnering and M&A to achieve their strategic objectives.”
Fintech investments in Europe reached $39bn over the period, with the UK attracting $26bn. London saw the largest fintech deal in the first half of 2021 across all of Europe, with fintech data firm Refinitiv gaining $14.8bn.
The fintech sector in the UK has seen “record-breaking” investment so far this year, despite the impact of the pandemic and leaving the EU.
Analysis carried out by Innovate Finance showed a total of £4.1bn has been fed into Britain’s fintech sector in the first half of this year – a 34% increase on the total amount in 2020.
The country remains a global and European leader for fintech investment. Previous research by Innovate Finance revealed that the UK fintech sector continues its role as the top-ranking investment destination in Europe, with $4.1bn venture capital and growth private equity investments across a total of 408 deals.
According to the data, Britain accounted for just under half of the total $9.3 billion invested, with more investment capital than the combined efforts of France, Switzerland, Germany, the Netherlands and Sweden.
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John Hallsworth, Partner at KPMG in the UK, said in the report: “Covid-19 sparked a real race to digital in the financial services space here in the UK, which has spurred on the major banks.
“Many of them have diverted large swaths of their investment pots into digitization — which is a major reason we are seeing so much corporate investment right now.
“The same is true for other incumbents in other financial services subsectors as well.”
Scotland, too, has seen a major boost to its financial tech sector, with FinTech Scotland in May announcing the development of a ten-year ‘innovation roadmap’ to continue support of the burgeoning sector.
Data from FinTech Scotland revealed that the number of fintech SMEs continues to grow across the country, with a 15% increase since the start of 2021.
The FinTech Scotland community now stands at around 170 SMEs, including 10 new start-ups, four international businesses and nine established Scottish tech businesses.
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